Dow Chemical CEO Andrew Liveris’ Credibility Under Stress

Chemicals as well as credit, are ruled by the planetary energy Neptune and the sign Pisces. On December 28, 2008 as transiting Uranus in Pisces (shocks and surprises) exactly challenged Dow Chemical’s founding chart Neptune in Gemini, the government of Kuwait suddenly announced it was canceling its joint venture with Dow, a deal valued at $9 billion.

Gemini is ruled by Mercury, the planetary energy of contractual agreements. Dow was founded when Mercury was retrograde* in Gemini. Dow’s retrograde Mercury challenges natal Jupiter and opposes natal Saturn and Uranus, raising the potential that Dow enters into ventures or makes acquisitions that it overpays for (Jupiter) in relationship to the return (Saturn). Uranus raises the potential that Dow could enter into deals too quickly without thinking through all the ramifications and including the appropriate contractual contingencies. The surprise nature of Uranus would also describe deals that suddenly come undone.

Dow depended on the $9 billion from the $17.4 billion “K-Dow” joint venture to finance its $15.3 billion takeover of Rohm & Haas (ROH) that Dow announced back in July. Yesterday Moody’s and Standard & Poor’s downgraded Dow’s debt to three and two notches above junk status respectively. Dow’s (DOW) stock closed down 19% to $15.32, its lowest level since 1991. Rohm & Haas closed down 16% to $53.34, a far cry from Dow’s $78 a share takeover price.

The Dow/Kuwait/Rohm & Haas saga is a story of how over optimism obscures logic, from overpaying to failing to have appropriate contractual contingencies in place. Dow did not have a contingency with R&H that the deal was contingent on its venture with Kuwait. Dow could take legal action against the Kuwaiti government for a maximum $2.5 billion breakup fee, but Dow would have to prove Kuwait’s cancellation has damaged the company. Litigation would only serve to spoil current and future potential business arrangements with Kuwait.

Dow could pay Rohm & Haas a $750 million breakup fee to nix the acquisition; otherwise the deal must be consummated by January 10, 2009. If Dow goes ahead but fails to complete the deal by that date, Dow will be forced to pay R&H shareholders an amount above $78 a share for each day the deal gets delayed. In addition to the money from the Kuwaiti venture, Dow arranged a 12 month bridge loan for $4-6 billion from a consortium of 19 banks led by Citigroup (C), along with Merrill Lynch (MER) and Morgan Stanley (MS). Why would a company box themselves in for only 12 months leaving no margin for error in financing the deal? Warren Buffett and Kuwait’s sovereign wealth fund had agreed to chip in $4 billion to fund the deal through purchasing preferred stock in Dow after the merger.

Suddenly Andrew Liveris, Dow’s normally media friendly chief executive, refuses to be interviewed. Liveris felt acquiring R&H would give Dow exposure to the higher margin and less cyclical specialty chemical business. He projected that Dow’s commodity chemical business would experience a trough beginning in 2010. With both Saturn in Libra and Pluto in Capricorn challenging Dow’s first stock trade chart natal Sun in Cancer and Saturn in Aries in 2010, followed by transiting Uranus in Aries during 2011-12, Liveris is right. What he failed to factor in was how the cycle of Saturn in Virgo opposite Uranus in Pisces (2008-2010) would suddenly and severely contract the availability of credit to even the most blue chip companies, causing a chain reaction in global finance worldwide.

Both the Dow founding chart and the Dow stock chart feature either natal or progressed** Neptune (chemicals & credit) in Gemini or Virgo and at degree areas of the zodiac affected by the transiting Saturn/Uranus opposition. Saturn/Uranus energies were active at the September 15 Full Moon when Lehman Brothers filed for bankruptcy, and the December 12 Full Moon when the government was debating a Big Three auto bailout. These energies will be especially active again around February 5, March 10, and mid September 2009.

If the Dow/Rohm deal goes through, Dow will be left with an estimated $29 billion in debt. Yet Liveris has insisted that Dow will continue to pay its $1.68 annual dividend. The December 27, 2008 Capricorn New Moon exactly conjoined Liveris’ natal Mars in Capricorn. Mars conjoined at the New Moon, indicated action (Mars) taken by a government (Capricorn) regarding a joint venture that affected a partner’s merger (Pluto). Liveris’ chart is highly active in January. The transits to his natal and progressed planets suggest that whatever happens with this deal, his credibility and reputation as CEO could be compromised.

The January 10, 2009 deadline is the day of a potent Full Moon. Mercury turns retrograde the following morning, calling contractual arrangements into question. During the three week periods three to four times a year when Mercury is retrograde, contractual agreements are more likely to be opened up for renegotiation or fall apart. Mercury retrograde challenges Liveris’ Saturn in Pluto-ruled Scorpio, reflecting this deal will be difficult for him and likely detrimental to his reputation. Mercury will oppose Venus in Leo in Dow’s founding chart; either way Dow will be shelling out money. Neptune in Aquarius challenging Dow’s stock chart point of reputation relates to credit issues or potential rumors that affect Dow’s stock price around that time.

Having never invested in DOW or ROH, my knowledge of the companies is very limited. But it would seem that without a Dow deal, ROH’s stock could potentially fall back to its historical support level in the $20 range.

*Planets do not really move backwards but appear to from Earth’s vantage point.**A mathematical calculation that moves the planets forward in time as a method of prediction.